APIs in the banking industry enable financial institutions to connect with businesses and consumers, transfer information and funds more quickly, and expand the number and scope of services they can offer.
In our previous article on virtual bank accounts, we describe what virtual bank accounts are, how they function, and their benefits. Just like a regular bank account, it has a valid account number and it is used to make various bank account transactions easier
This article will discuss some ways financial institutions and businesses can make their payments system smoother with a Virtual Account API.
How APIs work In Virtual Banking
An API is a group of tools and programming codes used to build software and applications. An API queries data, parses responses and sends instructions between one software platform and another. APIs are used extensively in providing data services across a range of fields and contexts.
APIs in the banking industry enable financial institutions to connect with businesses and consumers, transfer information and funds more quickly, and expand the number and scope of services they can offer. APIs for the financial industry are one of the fastest-growing use cases for APIs because they enable interoperability between fintech platforms and other platforms.
With a virtual account API, financial institutions, fintechs, corporates and more can increase the reach and speed of transactions, therefore making operations more efficient (fast and less expensive).
Types of APIs In Virtual Banking
- Private APIs: These are most commonly used in traditional banking. Private APIs enhance operational efficiency and are viewed as essential by a considerable number of banks.
- Partner APIs are typically used when operations occur between a specific third-party partner and a bank. Partner APIs allow for expansion, especially in relation to new channels, products, etc.
- Open APIs: The least commonly used type of API, this structure involves making business data available to third parties. In this case, banking institutions are often concerned with the security of data and other sensitive client information.
Understanding Virtual Bank Account API
Over the last few years, APIs have become particularly significant to banking institutions and fintech organizations. APIs provide better means to share data, integrate with systems, and personalise services, making financial services quick and efficient.
A virtual account API can help institutions and businesses collect payments smarter in many ways such as:
- Fee Collection For Educational Institutions
Collection of fees via traditional banking methods have always presented a major challenge, administratively speaking. However, with the use of a virtual bank account API, fee collection can be easily automated. Each student is simply assigned a unique virtual bank account number and any payment made via that channel is easily reconciled.
- Seamless B2B Transactions
Virtual bank account APIs can be used to automate the process of paying suppliers and develop flexible solutions across industries. Virtual bank account numbers are assigned to each of your retailers and/or suppliers, and every time funds are transferred to your account, get notified instantly. Virtual bank account APIs help streamline the payment process.
Benefits Of APIs In Virtual Banking
With APIs in virtual banking, developers have more flexibility to provide the best features and tools to streamline financial services, thereby creating a surge of competition and innovation in fin-tech products. This has completely revolutionised traditional B2B transactions. Some of the key benefits of APIs in virtual banking includes:
- Real-time capabilities that enable the end-user to get enhanced visibility of cash flow, cash position, and more, across currencies.
- Reduction of administrative hurdles with regard to managing finances like applying for a business loan, checking your creditworthiness, etc.
- Having a single view of all your finances while being able to control, track, and analyse all financial movements, all in one place.
The role of APIs in virtual banking cannot be overemphasised, they certainly make payment processes more streamlined and efficient, whilst eliminating the time constraint and the administrative complexities of the traditional banking process.
The following are key takeaways from this article:
- An application programming interface (API) establishes an online connection between a data provider and an end-user
- The use of APIs in virtual banking increases the reach and speed of transactions.
- APIs make virtual banking operations more efficient.
- APIs in virtual banking create an opportunity for fin-techs to innovate and improve upon existing traditional banking services.